Corporate Finance Commons^™

Shareholder Litigation And Corporate Disclosure: Evidence From Derivative Lawsuits, Thomas Bourveau, Yun Lou, Rencheng Wang

Research Collection School Of Accountancy

Using the staggered adoption of universal demand (UD) laws in the United States, we study the effect of shareholder litigation risk on corporate disclosure. We find that disclosure significantly increases after UD laws make it more difficult to file derivative lawsuits. Specifically, firms issue more earnings forecasts and voluntary 8-K filings, and increase the length of management discussion and analysis (MD&A) in their 10-K filings. We further assess the direct and indirect channels through which UD laws affect firms' disclosure policies. We find that the effect of UD laws on corporate disclosure is driven by firms facing relatively higher ex …

U.S. Firms On Foreign (Tax) Holidays, Travis K. Chow, Jeffrey L. Hoopes, Edward L. Maydew

Research Collection School Of Accountancy

We undertake the first large-sample analysis of foreign tax holiday participation by U.S. firms. Tax holidays are temporary reductions of tax granted by governments, usually contingent on the firm making new operational investments in the country. We predict and find that firms are more likely to participate in foreign tax holidays if they are highly capital-intensive and have highly profitable foreign operations, and less likely to participate in foreign tax holidays if they are capital constrained and if the firm is headed by a short-term focused CEO. While foreign tax holidays reduce taxes on foreign income, we also find that …

The Competitive Landscape Of High-Frequency Trading Firms, Ekkehart Boehmer, Dan Li, Gideon Saar

Research Collection Lee Kong Chian School Of Business

We examine product differentiation in the high-frequency trading (HFT) industry, where the “products” are secretive proprietary trading strategies. We demonstrate how principal component analysis can be used to detect underlying strategies that are common to multiple HFT firms, and show that there are three product categories with distinct attributes. We study how HFT competition in each product category impacts the market environment, presenting evidence that indicates how it influences the short-horizon volatility of stocks as well as the viability of trading venues.

The Wall Street Gap: A Theoretical Analysis Of Company Valuation Discrepancy, Peter Twomey

Undergraduate Economic Review

Examination of prior research suggests that affiliated sell-side analysts are subject to conflicts of interest that cause them to issue optimistically biased stock recommendations for investment banking clients. Using a sample of public technology companies, I find that analysts have a theoretical discrepancy of up to 26% when valuing companies using a discounted cash flow model, and a 19-22% theoretical discrepancy when using comparable company analysis. I showcase how conventional valuation methodologies can allow sell-side analysts significant leeway that can be used to further unethical agendas and draw conclusions around the usefulness of regulatory intervention in the financial services industry.

Regulatory Repercussions In Finance, Jennifer L. Brodmann

LSU New Orleans Theses and Dissertations

This dissertation examines the impact of regulation and public policies on firm performance. Chapter 1, entitled “Political Contributions, Insider Trading, and CEO Compensation”, determines why CEOs from politically-connected firms receive higher pay compared to their non-politically connected peers. We investigate whether insider trading can explain high CEO pay. Using hand-collected firm-level lobbying data, we examine whether politically-connected CEOs engage in insider trading after sponsored bills are introduced and passed in the U.S. legislative bodies. Our results show that politically-connected CEOs commit insider trading, which yields higher compensation packages. In addition, we also find that lobbying benefits firm performance. Politically-connected firms …

Credit Supply, Price And Financial Stability In Markets And Institutions, Austin J. Dejan

LSU New Orleans Theses and Dissertations

In Chapter 1, the staggered nature of the adoption of interstate bank branching deregulation in the United States is utilized as an exogeneous shock to investigate the managerial incentives involved in corporate socially responsible (CSR) activities. Using Kinder, Lydenberg, and Domini Research & Analytics, Inc. for our CSR measures, we find a significant negative relation between the extent of deregulation and CSR practices, which implies that deregulation-led rising competition in product market makes the non-financial firms more concerned about protecting interests of shareholders than other stakeholders. Specifically, firms with low pricing power tend to significantly reduce their CSR activities. Our …

The Impact Of Governance Mechanism On Performance And Survival Of Entrepreneurial Firms, Noura S. Metawa

LSU New Orleans Theses and Dissertations

The dissertation consists of two essays.

The first essay studies governance structures and their effectiveness for start-up companies and their survival. We utilize data from the Kauffman Survey, which tracks a sample of firms from their inceptions through their first eight years of existence. We hypothesize and find evidence that a startup's governance system affects its survivability as well as its performance. We show that controlling for the firm size and the industry, cross-sectional variations in the performance of the start-up firms can be explained by governance variables; the presence of one or more independent board member on the board, …

Technological Diversity In Finance, Blake K. Rayfield

LSU New Orleans Theses and Dissertations

The dissertation consists of two chapters on measuring firms technological profile. Patent data can be grouped into two primary generations. The first generation lead by the work of Schmookler (1966), Scherer (1982), and Griliches (1984), and the second generation led by Trajtenberg, Jaffe, and Henderson (1997) and Kogan et al. (2016). When combined, both generations data spans from nearly 1926-2010 and has made a meaningful impact on innovation research. In the first chapter, I propose a third generation of patent data. The third generation of patent data has two distinct contributions. First, it extends patent-firm ownership information beyond 2010 to …

2018 Q2 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Pepperdine Graziadio Business School, in partnership with Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

Avis Budget Group: A Financial Analysis, Tralonie Perkins

Dissertations, Theses, and Projects

This paper presents a financial analysis behind Avis Budget Group, Inc. (CAR), a leading global provider of vehicle rental and car sharing services, operating three of the most recognized brands in the industry: Avis, Budget and Zipcar. Utilizing both qualitative and quantitative analysis, this report encompasses comprehensive data regarding the industry in which CAR competes, the company’s recent financial results, and forecasts of its future growth with five-year pro forma financial statements used to build a valuation model.

Marriott International, Inc: A Financial Analysis, Lai Wei

Dissertations, Theses, and Projects

Marriott International, Inc: A Financial Analysis

Executive Portfolio Diversification Through Dividends, Janette Goodridge

All Graduate Plan B and other Reports, Spring 1920 to Spring 2023

In recent decades, many managers and executives have received company stock and stock options as a portion of their pay. As the incidence of this phenomenon increased, it became evident that insiders needed a way to diversify their holdings. One way this could be accommodated is through the issuance of dividends. This paper examined how executive stock ownership and managerial power impacted a firm’s dividend policy. Specifically, it examined the power of an executive as measured by the G index. It further took into account the current level of ownership for a particular manager, as well as the value of …

Studies Of Financial Analysts: Over-Optimism, Investment Value And Herding Behavior, Tao Li

2018

Financial research analysts are experts who analyze the financial markets and company fundamentals to make investment recommendations. Based on the US analysts’ stock recommendations, I examine the issue of financial analysts’ over-optimism, the investment value of analysts’ stock recommendations, and analysts’ leader-follower herding behavior. The goal of this thesis is to enhance the understanding of the roles that financial analysts play in promoting information transmission in the financial market. The study of analysts’ over-optimism focuses on the market reaction asymmetry. Consistent with analysts being over-optimistic, the financial market responds more strongly to analysts’ unfavorable recommendations than to their corresponding favorable …

High Returns And Low Volatility: The Case For Mid-Cap Stocks, Ryan Lynch

Undergraduate Honors Theses

This study examines excess risk-adjusted returns generated by mid-cap firms with an average market equity between $2.4 billion and $5.5 billion in 2017. Researchers have heavily studied the small-firm effect since its identification in the early 1980s, leading investors to overweight small-cap securities. Additional investments in the small-cap segment caused the small-cap anomaly to weaken. This study finds that excess returns of small-cap firms compared to mid-cap firms are not statistically significant in the periods 1946 – 2017 and 1982 -2017. However, mid-cap firms generate significantly higher 3-year average returns relative to small and large-cap firms after the initial identification …

Option Listing And Information Asymmetry, Jianfeng Hu

Research Collection Lee Kong Chian School Of Business

Option listing increases informed and uninformed trading by 12.4% and 23.9%, respectively, in the US between 2001 and 2010, hence reducing relative information risk. We establish the causal effects using control stocks with similar propensities of listing and a quasi-natural experiment using option listing standards. The benefits are more prominent for stocks with active options trading and opaque stocks. The reduction of information risk is larger for good news than bad news, and the stock price response to earnings surprise weakens after listing. The results suggest that options improve the overall market information environment beyond substitutional effects to stock trading.

Valuing Downstream Oil & Gas Companies: The Case Of Phillips 66, Taylor Robertson

Finance Undergraduate Honors Theses

While oil and gas prices remain volatile and often uncertain, they can provide key insight to businesses within the industry. In fact, oil and gas companies are considered to be more linked to oil prices than other day to day operations. In this paper, I will illustrate the relationship oil prices and crack spreads have on downstream oil and gas companies, specifically Phillips 66. Additionally, the Capital Asset Pricing Model and Fama & French 3-factor Model are evaluated to determine the best method to value a downstream oil and gas company. To do this, I will regress all factors against …

Acquisitions: Walmart Vs Amazon, Scott Sims

Finance Undergraduate Honors Theses

The retail industry is in the process of undergoing major change. Historically big box brick and mortar strategies have dominated, but this is changing in the age of impatience and instant gratification. As consumers want items more conveniently, online retail has taken hold with no semblance of anticipated decline. At the forefront of this transformation are two industry giants: Walmart and Amazon. Walmart finds itself on the side of brick and mortar with 11,718 physical retail locations worldwide. Amazon is dominating the online retail space with control of a staggering 44% of all US e-commerce sales in 2017. These equally …

Essays On Banking And Corporate Finance, Alev Isil Yildirim

Dissertations, Theses, and Capstone Projects

This dissertation consists of two chapters.

Chapter 1: The Effect of Relationship Banking on Firm Efficiency

This paper analyzes the impact of relationship bank oversight on firm operational efficiency and default risk. I find that a new loan from a relationship bank improves the technical efficiency of inefficient firms that have an elevated probability of default. Moreover, borrowing firms with elevated default risk exposure experience reductions in their probabilities of default in the years following new relationship bank loans, benefiting both banks and borrowers. Thus, the benefits of relationship bank monitoring are most apparent the higher the ex ante default …

Debt Heterogeneity And Covenants, Yun Lou, Clemens A. Otto

Research Collection School Of Accountancy

Coordination failure among owners of heterogeneous debt types increases distress costs. Covenants reduce expected distress costs by lowering the probability of liquidity shortages, increasing liquidation values, and incentivizing creditor monitoring. We predict and find that new debt contracts include more covenants when borrowers' existing debt structures are more heterogeneous. Our findings suggest that covenants are not only used to address creditor-shareholder conflicts but also to reduce the expected costs of coordination failure among creditors. Further, our results indicate a dynamic component missing from static debt structure models: Debt heterogeneity entails additional covenants (i.e., constraints) when raising future debt.

Ethereum And The Sec: Why Most Distributed Autonomous Organizations Are Subject To The Registration Requirements Of The Securities Act Of 1933 And A Proposal For New Regulation, Tiffany L. Minks

Texas A&M Law Review

In a world full of new technology, the risk of fraud is constantly increasing. In the securities industry, this risk existed long before the use of technology. Congress enacted the Securities Act of 1933 to combat the risk of fraud and misrepresentation in the sale of securities. By requiring full disclosure, investors have the opportunity to make informed decisions prior to investing. However, Distributed Autonomous Organizations (“DAOs”), through the use of blockchains and smart-contracts, engage in the sale of securities without fully disclosing the risks or complying with the registration requirements of the Securities Act of 1933. Compliance with the …

The Legend Of Wara And Benchmarking Purchase Price Allocation Data, Matthew Crane

Doctoral Dissertations (DBA)

This paper examines the relationship of the relative weightings of intangible assets recorded in purchase price allocations by industry based upon a weighted average rate of return (“WARA”) framework to determine if there is a statistical relationship between the value weightings and discount rates and if benchmarking the value weightings to industry data can be used as a reliable indicator of reasonableness. Both the WARA process and benchmarking assume that the relative values of intangibles impact the discount rate selected or that there is commonality in the industry ratios. Intuitively, the use of WARA and Benchmarking for financial reporting both …

Capm-Based Company (Mis)Valuations, Olivier Dessaint, Jacques Olivier, Clemens A. Otto, David Thesmar

Research Collection Lee Kong Chian School Of Business

There is a discrepancy between CAPM-implied and realized returns. Using the CAPM in capital budgeting -- as recommended in finance textbooks -- should thus have valuation effects. For instance, low beta projects should be valued more by CAPM-using managers than by the market. This paper empirically tests this hypothesis using publicly announced M&A decisions and shows that takeovers of lower beta targets are accompanied by lower cumulative abnormal returns for the bidders. Specifically, our estimates imply an average net loss to bidders corresponding to 12% of the average deal value and exceeding USD 10 billion per year in aggregate.

Cultural Disparity And The Impact On Work Life Balance, Bryan Campbell

Senior Theses

This research examines the differences in work life balances between varying countries around the world. In order to do so, a proxy index was created by investigating a portion of questions from respondents of the World Values Survey. Comparing this to Hofstede's Insights on National Culture allowed for a unique perspective as to whether the country individualism ratings could then be used to assert a relationship between these metrics.

Are Bond Ratings Informative? Evidence From Regulatory Regime Changes, Louis H. Ederington, Jeremy Goh, Yen Teik Lee, Lisa Yang

Research Collection Lee Kong Chian School Of Business

The recent Dodd-Frank Act (Section 939B) enacted in 2010 repeals credit rating agencies’ (CRAs) exemption from Regulation Fair Disclosure. We test whether CRAs continue to provide new information to the market after the repeal. We find that the significant pre-repeal stock price responses to rating changes disappear after the regime change. Bond price reactions however remain significant. These results are even more significant at the investment-speculative boundary. Our evidence suggests that CRAs serve as a conduit for transmitting private information before the repeal. It also shows that regulatory constraint is a channel by which credit ratings affect cost of financing.

Mind The Gap(S): Solutions For Defining Tipper-Tippee Liability And The Personal Benefit Test Post-Salman V. United States, Matthew Williams

Fordham Journal of Corporate & Financial Law

The Supreme Court’s decision in Salman v. United States reaffirmed (and indeed, clarified) the central holding of Dirks v. SEC that no additional pecuniary or reputational gain is needed when an insider gives information to a “trading relative or friend.” While this was considered a win for prosecutors, the Court chose to abstain from considering more complex questions regarding tipper-tippee liability. Namely, the Court provided no guidance on what constitutes a “friend” or “trading relative” nor how a tippee “should know” whether information was improperly disclosed. Without any clear standards, prosecutors and courts have wide discretion to determine whether these …

Strategic Implications Of Blockchain, William R. Adams

Undergraduate Honors Theses

This thesis introduces blockchain, the underlying technology of cryptocurrencies such as Bitcoin, and discusses how best to conceptualize it relative to other technologies. Following an explanation of the fundamentals of blockchain, also known as the distributed ledger, I identify the characteristics of the technology. Building upon blockchain’s inherent strengths and limitations, I explore potential business applications of blockchain. Finally, I recommend that leaders continue to track the development and adoption of blockchain technology, even if they decide that implementing it does not align with their organization’s strategy at present.

Glossary Of Business Evidence, Paul C. Boyd

MBA Faculty Conference Papers & Journal Articles

No abstract provided.

Industry Tournament Incentives, Zhichuan Li

Business Publications

We empirically assess industry tournament incentives for CEOs, as measured by the compensation gap between a CEO at one firm and the highest-paid CEO among similar (industry, size) firms. We find that firm performance, firm risk, and the riskiness of firm investment and financial policies are positively associated with the external industry pay gap. The industry tournament effects are stronger when industry, firm, and executive characteristics indicate high CEO mobility and a higher probability of the aspirant executive winning.

Risk Consumption, Sridhar Ramamoorti, Rick Stover

Accounting Faculty Publications

Understanding the difference between risk appetite and risk tolerance can deter organizations from digesting too much risk.

The concepts of risk appetite and risk tolerance were introduced in 2004 in The Committee of Sponsoring Organizations of the Treadway Commission’s (COSO’s) Enterprise Risk Management–Integrated Framework. Specifically, COSO defines risk appetite as “the amount of risk — on a broad level — that an entity is willing to accept in pursuit of value.” Naturally, organizations will have different risk appetites depending on their industry, management philosophy, operating style, culture, and objectives. Therefore, a range of appetites potentially exist for distinct risks, which …

Evaluating Theories On Income Polarization In The U.S., Jocelyn Anderson

Political Science Theses and Capstones

This paper examines the relationship between technological change and income polarization within the United States. I examine and discuss the reshaping of the U.S. labor market via skill- biased technological change, possible effects of globalization, as well as institutional policies. My research also explored how aspects of corporate structure norms, and tax avoidance could be causes for increased income polarization related to top tier incomes. Using current literature and data to consider the top causes of an increasingly widening wage gap, one can see that advancements in technology and the changes it has had on the labor market, as well …